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Ramlal Bhadani and anr. Vs. Dass Bank Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectBanking
CourtKolkata
Decided On
Reported inAIR1944Cal143
AppellantRamlal Bhadani and anr.
RespondentDass Bank Ltd. and anr.
Cases ReferredJethabhai v. Devidas Vardasa
Excerpt:
- .....the delivery of a package to a cloak room or to a carrier and the return of such package to the owner. mr.mookerjee also relied upon 4 com. cas. 227, union credit bank v. mersey dock (1899) 2. q.b. 205. certain portions of the judgment are in his favour and certain portions, against him. he relied. upon the principle laid down in 40' t. l. rule 302, underwood ltd. v. bank of lever-pool and martins (1924) 1 k.b. 775 that mere credit to the client's account before collection does not make the bank a buyer. this, however, is not contended for by the plaintiffs.6. the plaintiff's contentions are that this is not a cloak room or carrier case; it is not a case where the parties are restored to their original position. it is not a case of return or if return, it is return in a different.....
Judgment:

Ameer Ali, J.

1. This is a commercial suit. Although argued on both sides by counsel comparatively junior in the profession it was, if I may say so, as ably prepared and presented as any ease that I have heard in this Court, and that is saying a good deal. Although the plaintiff will succeed nothing more, in my opinion, could have been done by Mr. P.B. Mookerjee to whose arguments on behalf of the defendants I shall refer and the same must be said of Mr.Bachawat and Mr.Sethia who appeared for the plaintiffs.

2. The short facts are as follows: On 12th May 1941, one' Mohanlal Desai, the bent of whose particular genius will appear from the circumstances of the case, opened an account with the defendants, the Dass Bank, with Rs.500. This account is exhibited and in the light of what subsequently transpired tells its own little story. On 9th June 1941, this account stood to credit at Rs.5 and on the same day the credit amounted to Rs.2605. On 10th June 1941, Rs. 2500 had been withdrawn and the amount standing to Mr.Desai's credit was then Rs.105. Mr.Desai has disappeared. The increase of Rs. 2600 on 9th June 1941 is thus explained. The plaintiffs carry on business under the name of Ramlal Jugalkishpre at Gaya. Ramlal Jugalkishore on that date bought a draft payable to themselves in 'the name of their Calcutta business Jitenram Ramlal. This draft No. AB 91,662 was bought by Ramlal Jugalkishore from the Imperial Bank at Gaya and was drawn on Imperial Bank, Burrabazar branch. It was posted and sent by ordinary unregistered post on 11th June 1941. Jitenram Ramlal notified the Imperial Bank that the draft has not come to hand. On 27th August 1941, this suit was filed by the plaintiffs against the bank for damages for conversion and alternatively for money had and received. It is admitted that the endorsement on the draft in favour of the Dass Bank is a forgery by our ingenious gentleman Mr. Mohanlal Desai who evidently obtained it in the post. The issues raised by Mr. N.C. Chatterjee, if I remember rightly, were as follows:

(1) Did the defendant bank act wrongfully (a) in taking delivery of the draft; (b) presenting the same to the Imperial Bank; (e) in obtaining payment from the Imperial Bank; (d) in making payment to defendant 2, the said ingenious gentleman. (I had forgotten to mention that he was a defendant. Of course he has not entered appearance.)

(2) Do the facts alleged in the plaint constitute conversion by the defendant ?

(3) Was the plaintiff guilty of negligence asalleged in para. 5 of the written statement and, if so, is the claim barred by estoppel The negligencealleged by the defendant bank is the sending of the draft by ordinary unregistered post.

(4) Did the defendant bank reoeive payment of the draft on behalf of its customer in good faith and without negligence ?

(5) Damages.

3. I will eliminate issue (4) in view of the fact that (although no negligence on the part of the defendant is alleged) such negligence would only be material in the event of the bank relying on Section 131, Negotiable Instruments Act, or upon an analogous principle. Section 131 only applies in case of crossed cheques, and Mr.Mookerjee was unable to discover any analogous principle recognised by the law.

4. Issue 3. Negligence of the plaintiff-this is ploaded in the written statement but is only material in so far as such negligence can constitute a bar or estoppel preventing the plaintiff from relying upon their title. Unfortunately, for Mr. Mookerjee, the law is strict. Such negligence in Order to constitute an estoppel must be the direct cause of what has taken place. Moreover on the authorities both in England and India it is difficult to contend that mere sending through the post constitutes such negligence.

5. In fact it comes down to the question of conversion, and the English law of conversion is peculiarly intolerant-shall we say, to the converter or peculiarly favourable to the owner. Let us take the bank's case, argued with much ingenuity by Mr.Mookerjee, that the bank in collecting the draft for Mohanlal was an innocent agent; that is admitted-that there was no duty on the part of the bank to do anything for the plaintiffs: at any'rate no duty to make things better; that, in so far as stress is laid upon the changing of the draft into cash. The draft according to mercantileusage is already cashed; lastly the bank only took and returned the article to the person who delivered it to the bank-the parcel in cloak-room theory. This theory was no doubt discovered by Mr. Mookerjee in Rymell's case, and from thence extracted and developed, National Mercantile Bank Ltd. v. Rymell (1881) 44 L.T.767. In that case so far as I remember, the defendants were auctioneers. The article had been deposited by a person who had created a legal mortgage over it and then, before the sale by the defendants as auctioneers, had ordered the defendants to deliver it to a third person. It was held that the defendants had not dealt with the article in question, they had received it from A-they had made it over to A's order. The illustration or example upon which one learned Judge has based his decision was the delivery of a package to a cloak room or to a carrier and the return of such package to the owner. Mr.Mookerjee also relied upon 4 Com. Cas. 227, Union Credit Bank v. Mersey Dock (1899) 2. Q.B. 205. Certain portions of the judgment are in his favour and certain portions, against him. He relied. upon the principle laid down in 40' T. L. Rule 302, Underwood Ltd. v. Bank of Lever-pool and Martins (1924) 1 K.B. 775 that mere credit to the client's account before collection does not make the bank a buyer. This, however, is not contended for by the plaintiffs.

6. The plaintiff's contentions are that this is not a cloak room or carrier case; it is not a case where the parties are restored to their original position. It is not a case of return or if return, it is return in a different form. That 'conversion' must be inferred from the following set of circumstances-that the bank took the draft, that it endorsed it payable to itself, that it presented it to another bank for collection, that it got it cashed, that it credited the non-owner, that it allowed the non-owner to withdraw or take back the money. This position is covered by the decided cases Arnold v. Cheque Bank (1876) L.R. I.C. P. 578, Kleinwort v. Comptoir National d'Bscompte de Paris. Madhav-das Jethabhai v. Devidas Vardasa (1894) 2 Q.B. 157 followed in a Bombay case,Madhav-das Jethabhai v. Devidas Vardasa ('34) 21 A.I.R 1934 Bom. 400 at p.104. These decisions and the law generally have been summarised in Hort on Banking (ch.9). The best and most concise summary of the position of an innocent agent who is nevertheless liable for conversion is to be found in Hals-bury, Vol. I, Section 47 I presume this corresponds to 492 of the old edition:

An agent while acting on his principal's behalf acquires the actual or constructive possession of goods which are not in fact the property of his principal and deals with them in any 'manner which is obviously wrongful if his principal is not their owner or duly authorised by their owner as by selling and delivering them to a stranger or otherwise purporting to dispose of the property in them is guilty of a conversion.

His liability is not affected by the fact that he received them in good faith as the property of his principal and deals with them in accordance with his principal's instructions and ignorance of the true owner's claim unless the true owners are stopped from denying the principal's authority to dispose of them or unless the agent is a bankrupt receiving payment of the cross cheque on behalf of a customer. That is a clear 'and simple statement of the law by which the defendant bank is hit. I should have stated that Mr. Bagchi, the accountant of the bank gave his evidence fairly and I accept it. The bank was an innocent agent of a fraudulent or criminal principal. The suit therefore must be decreed and costs will follow the event certified for two counsel. There will be a decree for the amount claimed with interest at 6%.


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